Earl Scheib Announces First Quarter Fiscal 2003 Results
SHERMAN OAKS, Calif.--Sept. 12, 2002--Earl Scheib, Inc. (AMEX:ESH) reported its results for the quarter ended July 31, 2002, the first quarter of the fiscal year ending April 30, 2003.Net sales for the first quarter of fiscal 2003 were $13,070,000, a decrease of 11.7% from the first quarter of fiscal 2002 net sales of $14,807,000. The decrease in net sales resulted primarily from the Company operating 23 fewer retail paint and body shops at July 31, 2002 (pursuant to the planned restructuring of the retail paint and body business announced in the fourth quarter of fiscal 2001), as compared to July 31, 2001, and a less than one percent same-shop (shops still open one year or more) sales decrease during the first quarter of fiscal 2003 from the first quarter of fiscal 2002; partially offset by increased combined sales of $116,000 in the fleet and truck center and commercial coatings operations.
The operating loss for the first quarter of fiscal 2003 was $246,000, as compared to operating income of $291,000 in the first quarter of fiscal 2002. The decrease in operating income was primarily attributable to increased insurance expense of $176,000 and, despite the overall reduction in operating expenses (other than insurance), the adverse effect of the decrease in net sales.
During the first quarter of fiscal 2002, the Company, pursuant to the planned restructuring of the retail paint and body business, sold five parcels of real estate and its corporate office building for a net gain of $628,000 and $1,779,000, respectively. There were no sales of real properties during the first quarter of fiscal 2003.
The net loss for the first quarter of fiscal 2003 was $369,000, or $0.08 per diluted share, compared to net income of $1,609,000, or $0.37 per diluted share, for the first quarter of fiscal 2002. The Company did not recognize any federal income tax benefit for the operating loss in the first quarter of fiscal year 2003. Additionally, due to income allocation and state income tax laws, only part of the Company's state income taxes were offset by the operating loss.
Chris Bement, Chief Executive Officer and President, stated that, "The operating results for the first quarter, though below last year, were what we expected as we continue the restructuring of our retail paint and body business. As of July 31, 2002, we have closed 32 shops subsequent to the approval of the restructuring plan and intend to close seven more by the end of the current fiscal year. The restructuring is progressing ahead of schedule and these closures should mitigate the adverse effect during the late fall and winter months when bad weather significantly impairs the Company's operating results. In addition, we have reduced overall administrative costs at the divisional and corporate levels.
"With respect to our other business areas, the implementation of the new marketing strategy at the Gardena fleet and truck center seems to be progressing satisfactorily, and we have seen a slight sales growth during the current first quarter as compared to the first quarter in the prior year in the commercial coatings business."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 128 auto paint and body shops located in more than 100 cities throughout the United States.
"Safe-Harbor" Statements Under the Private Securities Litigation Reform Act of 1995
Certain written and oral statements made by the Company may be "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995, including statements made in this news release and in filings with the Securities and Exchange Commission. Generally, the words "believe," "expect," "hope," "intend," "estimate," "anticipate," "plan," "will," "project," and similar expressions identify forward-looking statements which generally are not historic in nature. All statements which address operating performance, events, developments or strategies that the Company expects or anticipates in the future are forward-looking statements.
Forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the Company's past experience or current expectations. The following are some of the risks and uncertainties that may impact the forward-looking statements: the impact of the Company's retail paint and body shop closures and operational restructuring, the effect of weather, the effect of economic conditions, the impact of competitive products, services, pricing capacity and supply constraints or difficulties, changes in laws and regulations applicable to the Company, the impact of advertising and promotional activities, the impact of the Company's expansion of its fleet services division, new product rollout and Quality Fleet and Truck Centers, commercial coatings business, the potential adverse effects of certain litigation, financing, insuring or lending constraints and the impact of various tax positions taken by the Company.
EARL SCHEIB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For The Quarter
Ended
July 31,
2002 2001
Net Sales $13,070,000 $14,807,000
Operating Income (Loss) (246,000) 291,000
Gain on Sales of Real Properties -- 2,407,000
Interest Expense, net (108,000) (104,000)
Income (Loss) Before Taxes (354,000) 2,594,000
Provision For Income Taxes 15,000 985,000
Net Income (Loss) $(369,000) $1,609,000
Basic Earnings Per Share $(0.08) $0.37
Diluted Earnings Per Share $(0.08) $0.37
Weighted Average Shares
Outstanding -- Basic 4,368,000 4,359,000
Weighted Average Shares
Outstanding -- Diluted 4,368,000 4,359,000